Premier Li Says China, Germany Could Be Economic 'Dream Team'

Monday, 27 May 2013 | 5:00 PM ETReuters

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China is ready to open up new sectors of its economy to German investors, Chinese Premier Li Keqiang said on Monday, in comments that highlight Beijing's drive for a special bilateral partnership with Berlin bypassing the EU.

"If we both come together in an ideal and optimal way, a dream team will emerge," Li told representatives of German business during a visit to Berlin, his first to a European Union capital since becoming premier in March.

Li urged closer cooperation in manufacturing — an area where German firms increasingly see China as a competitor as it moves up the value chain — and he singled out logistics, education and healthcare as sectors for German investment.

"China is willing to open up this space preferentially to Germany," said Li, an economist, without elaborating.

The European Commission in Brussels oversees EU trade ties with third countries and it was unclear how far Beijing could offer Berlin special access to markets denied to other member states, but Li's comments underscored the importance of China and Germany, the world's top two exporters, to each other.

Charles Dallara, Chairman of the Americas at Partners Group discusses how important the deepening of financial relationships is for China's economy.

Bilateral trade totalled nearly 150 billion euros in 2011 and Germany accounts for about a third of China's total trade with the 27-nation EU.

Germany produces the high-quality machinery and equipment that Chinese companies need to manufacture their goods, many of which end up back in Germany. China is a giant market for German luxury cars and state-of-the-art machinery, while Chinese exports to Germany include textiles, electrical goods and toys.

Underlining the importance of this economic relationship, Germany along with a number of other EU governments came out on Monday against the European Commission's plan to impose hefty duties on solar panel imports from China.

Brussels accuses Chinese firms of selling solar panels at below cost in Europe and plans to impose duties, making it far harder for China to gain market share.

German Economy Minister Philipp Roesler said after talks with Li there was "no need for more sanctions measures", echoing Chancellor Angela Merkel who had stressed Berlin's commitment to free trade during her own meeting with the premier on Sunday.

Merkel, who faces an election in September, is keen to avoid trade tensions with China, the world's second biggest economy. China has proven a valuable alternative market for German companies during the euro zone debt crisis, which has badly dented demand in their more traditional markets nearer to home.

Li also told Roesler China was determined to tackle intellectual property theft, a longstanding concern among Western investors, adding: "This also harms the innovation and motivation of Chinese firms."

The chief executive of industrial giant Siemens, Peter Loescher, said direct Chinese investment into Germany was still far too low at 1.2 billion euros against some 35 billion euros worth of German direct investment in China.